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PERFORMANCE
MANAGEMENT
in 2012State of the disipline annual magazine
PERSPECTIVES
12 interviews . 9 countries . Academics ...
Getting Key Performance Indicators (KPIs) right by using a rigorous KPI management framework
Over the last 3 years, the te...
Performance Management in 2012 1
OVERVIEW
© 2012 The KPI Institute Ltd.
All Rights Reserved.
ID number: TKI0121001
ISBN: 9...
2
TABLE OF CONTENTS
2
Trends
About the Report
Perspectives
04
06
67
45
Around the World
Introduction
1 Executive Summary
4...
Performance Management in 2012 3
TABLE OF CONTENTS
Performance Management in 2012 3
Resources
Career Software
84
81
75
100...
4
OVERVIEW
Primary Sources
The development of Performance
Management in 2012 is the result of a
qualitative research study...
Performance Management in 2012 5
OVERVIEW
Visual Summary
74% of Performance Management jobs
22% of all performance manager...
6
PERSPECTIVES
Map Overview
“We have to create
metrics that achieve
results without
compromising the
fairness of what we
d...
Performance Management in 2012 7
PERSPECTIVES
Alan Meekings
Landmark Consulting
UK
Peter Ndaa
Balanced Scorecard
Eastern A...
8
PERSPECTIVES
Disciplines of human knowledge
progress though the collective efforts of
academics, consultants and practit...
Performance Management in 2012 9
PERSPECTIVES
1 What does the term Performance
Management mean to you?
Performance Managem...
10
PERSPECTIVES
dots” between strategic performance and
individual performance. Whilst it is easy to
create KPIs and Perfo...
Performance Management in 2012 11
PERSPECTIVES
effective people, programs and metrics.
The Government of the Republic of
B...
12
PERSPECTIVES
11 What are the barriers to
achieving higher levels of
proficiency in Performance Management
among practiti...
Performance Management in 2012 13
PERSPECTIVES
From the perspective of interviewed
practitioners, Performance Management
r...
14
PERSPECTIVES
Academic Perspectives
From the academic angle, Performance
Management gives great importance to
strong ali...
Performance Management in 2012 15
PERSPECTIVES
Consultant Perspectives
From the point of view of consultants,
Performance ...
16
PERSPECTIVES
Interviews
The following interviews are alphabetically arranged with regards to the interviewee’s surname....
Performance Management in 2012 17
PERSPECTIVES
and achievements.
I think companies that have performed
well recently, like...
18
PERSPECTIVES
Overview
1. What does the term Performance
Management mean to you?
Different groups understand the
concept...
Performance Management in 2012 19
PERSPECTIVES
1990s, the impact of the Internet economy,
the talent diversity and individ...
20
PERSPECTIVES
helping them to reach their individual
dreams and needs, which can stimulate
enterprises to reach sustaina...
Performance Management in 2012 21
PERSPECTIVES
successful case. I’ve been a performance
consultant in China Mobile for 10 ...
22
PERSPECTIVES
between the human resources environment
in Asia. Therefore, I also explore the
application of the BSC in t...
Performance Management in 2012 23
PERSPECTIVES
of Performance Management is a long-
term behavior, which should be gradual...
24
PERSPECTIVES
some situations where they might see no
improvement, just the status quo and this
is going to start drivin...
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  1. 1. PERFORMANCE MANAGEMENT in 2012State of the disipline annual magazine PERSPECTIVES 12 interviews . 9 countries . Academics . Practitioners . Consultants AROUND THE WORLD Performance Management legislation and public sector implementations in 182 countries reviewed KEYWORD TRENDS Most popular Performance Management keywords in Google Trends EDUCATION Degrees . Subjects . Conferences CAREER Job trends by region . Salaries by industry Organizations use principles, tools and techniques of Performance Management to ensure that the purpose of their existence is fulfilled. Performance Management... has to do with how to monitor, control and manage the strategic and operational direction of an organization... RESOURCES Best selling books . Latest published books and articles . Portals . Communities SOFTWARE Corporate Performance Management . Business Intelligence . Employee Performance Management Jobs Legislation Interviews
  2. 2. Getting Key Performance Indicators (KPIs) right by using a rigorous KPI management framework Over the last 3 years, the team at The KPI Institute: With the insights gained we: establish and work with KPIs Key Performance Indicators Management Framework CERTIFIED KPI PROFESSION ALMANAGEMENT FRAMEWORK KEY PERFORMANCE INDICATORS v 1.0 2012 London PRO PRO PRO PRO AnoudPRO Leonne, Australia as facilitator of the topic. Settha Y., Cambodia It was indeed a great opportunity to be able to participate at the KPI training course. Look forward for other future programmes with Aurel. Aini, Malaysia It was a good programme, through which I got a clear idea about modern practices in using KPIs. Shamima, Bangladesh Raech, India I contacted smartKPIs.com for an in-house training with my team. We found both the material and the way of explaining concepts by doing examples invaluable. I would also say that this is a great value for money if you want to build the competency within your organization. Fahad, Saudi Arabia Thank you for the excellent training workshop on KPIs. It was an eye-opening experience and provided Parsa, Bahrain The feedback from the participants was gratifying and positive, and we are glad that we took the time area of KPI and all related. Hanan, Qatar Aurel is knowledgeable of all KPI aspect and answers all questions. We were never bored. as the course was very interactive. The course was beyond what expected. Nahla, Abu Dhabi The trainer was excellent. I look forward to attend more sessions with him in the future. My knowledge Neeti, Dubai I became a lot more knowledgeable about the KPI concept now. Manzuma, Nigeria Testimonials from around the world I really learned a lot from the program. As a result, I am more equipped in installing performance management systems, by being able to integrate the concepts of the MBO, Balanced Scorecard, KPI and Competencies into the system. Thanks so much for the knowledge you shared during our 3 days of training. Tess, Philippines Upcoming course dates: Europe, Middle East and Australia More details at: www.training.smartkpis.com Understand the complexities of working with KPIs and learn how to address them Develop a working knowledge of the Key Performance Indicators Management Framework Use over 30 performance measurement tools to facilitate the deployment and value added by KPIs.
  3. 3. Performance Management in 2012 1 OVERVIEW © 2012 The KPI Institute Ltd. All Rights Reserved. ID number: TKI0121001 ISBN: 978-1478181019 An appropriate citation for this report is: The KPI Institute, 2012, Performance Management in 2012, Melbourne, Australia Indemnity statement The KPI Institute has taken due care in preparing the analysis contained in this publication. However, noting that some of the data used for the analysis have been provided by third parties, The KPI Institute gives no warranty to the accuracy, reliability, fitness for purpose, or otherwise of the information. The KPI Institute shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice. Published by: The KPI Institute Life.lab Building 198 Harbour Esplanade, Suite 606 Melbourne Docklands, VIC 3008, Australia Telephone (international): +61 3 9670 2979 E-mail: office@kpiinstitute.org www.kpiinstitute.org Editorial coordination Aurel Brudan Editorial team Jamil Diu, Johnson Kee, Andreea Muntean, Alexander Schwab, Lynn L. Wang, Han Zhang, Charlotte Xuan Zheng, Huijing Zhuang Design Valeriu Pernes, Xaba Pete Performance Management as a discipline is at a crossroads in 2012. The reinvigoration of Performance Measurement started in the 1990s and it continued with an increase in the use of performance management systems. It is still a lot less mature compared to Project Management, Process Management and even Enterprise Architecture and this affects its relevance and credibility in the business environment. While improvements have been made in specific fields of knowledge, such as performance measurement and strategy implementation, the integration between organizational, operational and employee performance is not sufficiently addressed, neither in theory nor in practice. The lack of standards and of an integrated body of knowledge leaves room for interpretation and confusion. In recent times, two messages with the potential of becoming catalysts of change were sent outbytheeconomicenvironment.Thefinancialcrisishighlightedthatthearchaiccommand- and-control management structures may become dangerous in today’s interconnected business environment. The second message comes from start-up technology companies, many employing fresh approaches to culture and management systems, with impressive results. Such messages send a strong signal that Performance Management needs to progress to a new phase of maturity. However, as it happens many times in life, in order to change, it is important to know yourself in the context of your operating environment. Performance Management in 2012 is the first from a series of annual publications in which The KPI Institute will provide an overview of the state of the discipline. The current volume was developed through a qualitative research study, reviewing both primary collected data and secondary sources. It covers a variety of topics, from expert perspectives on the matter to keyword trends and review of governmental efforts in promoting Performance Management at national level. There were three main editorial rules followed in the development of the content. At The KPI Institute, we believe that the knowledge base of each discipline is expanded by the combined efforts of practitioners, academic researchers and consultants. This triangulation of views represents a blueprint of the series. Secondly, opinions from experts based in Anglo-Saxon countries were balanced by opinions from all corners of the world, from El Salvador to UAE and from China to Algeria. Globalization should be considered not only in economic terms, but also in terms of knowledge and insight generation and sharing. Thirdly, the aim of the content was to be practical, so as to ensure relevance to the widest array of stakeholders. Moreover, the content balances insights from subject matter experts with specific details about events, resources and keyword trends. Performance Management in 2012 also initiates the challenging thought that the future of this discipline is now in the hands of a new generation of professionals, ready for change and for a more integrated approach in terms of both the body of knowledge and the cooperation needed for its progression. It builds a strong foundation for restructuring the position of Performance Management as the main organizational capability which acts as the central nervous system, linking all other management systems and disciplines. Work has already begun on launching additional publications in this series, in the second half of 2012. Feedback regarding this edition and input for future editions are highly appreciated by our team of researchers and should be directed at editor@kpiinstitute.org. Performance Management 2012 Executive summary Editorial coordination: Aurel Brudan
  4. 4. 2 TABLE OF CONTENTS 2 Trends About the Report Perspectives 04 06 67 45 Around the World Introduction 1 Executive Summary 4 About the Report 5 Visual Summary Perspectives 6 Map Overview 8 Introduction 9 Global Perspectives 13 Practitioner Perspectives 14 Academic Perspectives 15 Consultant Perspectives 16 Interviews Around the world 45 Map Overview 45 Introduction 46 Country Profiles 47 Country Legislation Trends 67 Trends in Search 73 Media Exposure
  5. 5. Performance Management in 2012 3 TABLE OF CONTENTS Performance Management in 2012 3 Resources Career Software 84 81 75 100 Education Education 75 Educational Programs 79 Main Events Career 81 Job Trends 83 Salaries Resources 84 Bestselling Books 90 Latest Published Books 96 Journal Articles 98 Portals 99 Communities Software 100 Sofware as an enabler 100 Corporate Performance Management 101 Business Intelligence 102 Employee Performance Management
  6. 6. 4 OVERVIEW Primary Sources The development of Performance Management in 2012 is the result of a qualitative research study conducted in February 2012, by The KPI Institute. Both primary and secondary research sources were used as part of the study. Interviews A total of 12 semi-structured interviews with academics, practitioners and consultants were conducted via telephone and email in February 2012, the data being processed in the subsequent weeks. They generated rich insights into the state of Performance Management as a discipline. Legislation Google Search was the source used to research legislation related to Performance Management in different countries. The data was collected based on searches using keywords including but not limited to the respective country’s name, “Performance Management” and “legislation”. Trends in search Thirty keywords that addressed Performance Management at individual, operational and organizational levels were searched and examined using Google AdWords and Google Trends. These tools were selected for their reputation of providing global search data, through trend graphs. Global Monthly Searches from Google AdWords were used to provide an overview of the popularity of these keywords through the use of the 12-month average of user queries for each respective keyword. Graphs from Google Trends were used to illustrate the change and volatility of each keyword’s popularity. Media exposure Google News was the main data source, on levels of media exposure of Performance Management keywords. Ten keywords relating to Performance Management were used to search for levels of media exposure between 2000 and 2011. The search was restricted to these years as a significant amount of data was only available after year 2000. About the report Performance Management Research Current Research programs Topic Mission, Values, Value Drivers, Vision Statements Integrated Performance Management Balanced Scorecard Key Performance Indicators Interested in research? Contact us at research@kpiinstitute.org for exploring the opportunity to establish joint research programs What we offer? purposefulIdentity.com integratingPerformance.com BalancedScorecardReview.com smartKPIs.com
  7. 7. Performance Management in 2012 5 OVERVIEW Visual Summary 74% of Performance Management jobs 22% of all performance manager jobs, 28% of all strategy manager jobs 32% of strategy manager jobs Institutions offering degrees in PM (9) Main events around PM in 2012 (14) Education Keywords relevant to Performance Management degrees and subjects were entered into Google search in order to discover universities which offered degrees or courses focusing on this area. International business schools rankings published by the Shanghai Jiaotong University were used as reference. Conferences The initial selection of Performance Management events was based on recommendations from experts who had either attended or were aware of such events. In addition, a list of renowned organizations or associations specialising in Performance Management were analysed and the events they organized were recorded. Books Searches were conducted on “Bestselling Books” and “Latest Published Books”, based on 10 different keywords. The information was solely sourced from Amazon, which offers relatively objective and reliable information on book sales. Articles The most recently published articles in the field of Performance Management were found via “Latest Published Articles” search feature on the University of Melbourne Library Online Source and Google Scholar. Each potential source was then checked to determinewhetherthecontentofthearticle was relevant to Performance Management. Portals The initial selection of portals was based on recommendations from Performance Management experts and lists of useful portals that were available online. Web traffic statistics from Alexa and Compete were used to obtain the traffic ranking of selected websites. Communities The keyword “Performance Management” was searched in LinkedIn Groups in order to find the top 20 groups focused on Performance Management. Other keywords, such as “KPI” and “Balanced Scorecard” were also used to identify LinkedIn groups dedicated to these researched topics. Results (with the omission of software based groups) were then grouped into five categories, with the omission of software-based groups. Job trends The most popular job sites across six continents and two major markets (China and the Middle East) were used to assess for the number of positions available in the area of Performance Management. Furthermore, LinkedIn was used in order to increase the comprehensiveness of the search. The relative proportions of available jobs were then calculated for each respective region. Salary The Glassdoor website (http://www.glassdoor.com) was used to research information pertaining to the range of job salaries for both Strategy Managers and Performance Managers. The salary ranges across different industries are reported. Software Information pertaining to the trends in Performance Management software was derived and compiled from research reports published in 2011 and 2012 by Gartner.
  8. 8. 6 PERSPECTIVES Map Overview “We have to create metrics that achieve results without compromising the fairness of what we do.” “Practice in this area is guided by judgment and intuition, rather than by hard scientific findings.” Prof. Kenneth Merchant University of Southern California USA Jodi Traversaro State of California USA Enrique Rojo Granados Insightforce Strategy Management Consultants Mexico Isela Hernandez Cinepolis Corporativo Mexico Humberto E Della Torre Grupo Calleja El Salvador Ricardo Rodriguez-Ulloa CENTRUM Católica Peru “Performance Management should be more aware of initiatives and results aligned to strategy, rather than to operational results.” “You need to work on several things: develop philosophy, develop concepts, develop theory, develop mythologies and develop technology, in order to have the adequate tools for performance monitoring and process modeling of any kind of organizations. ” “Performance best practice = vision and strategy communication” “The biggest barrier in implementing a good Performance Management program is the lack of understanding from management that having a good organizational governance system is a pre-requisite to start the Performance Management program.”
  9. 9. Performance Management in 2012 7 PERSPECTIVES Alan Meekings Landmark Consulting UK Peter Ndaa Balanced Scorecard Eastern Africa Kenya Mabrouk Aib HydraPharm Group Algeria Ahmed Samy Western Region Municipality UAE Fengcai Qiu Singapore Empower Consulting Group Pte. Ltd. China Sujay Nair University of Melbourne Australia “If your system doesn’t tell employees what to do, they won’t understand the objectives and be able to link it back to the overall strategy. “ “Conflicts between local culture and Performance Management is a challenge.” “I see the next big opportunity for research in the Performance Management field as focusing on ways to improve the way organizations are managed, rather than on improving how their work gets done, either internally and/or across end-to-end supply chains.” “Linking of the dots between strategic performance and individual performance is a key trend.” “The proficiency in applying Performance Management is a challenge.” “Evaluating performance from a broader perspective is a key trend.”
  10. 10. 8 PERSPECTIVES Disciplines of human knowledge progress though the collective efforts of academics, consultants and practitioners. The following 12 interviews reveal insights on theory and practice, as well as emerging trends in Performance Management. The same set of questions was put forward to each of the three types of professions. Question 13 varied depending on the type of professional. 1 What does the term Performance Management mean to you? 2 What drives interest in Performance Management? 3 What are your thoughts on the relationship between Performance Management at organizational, departmental and individual level? 4 What are the 2012 key trends in Performance Management from the perspective of your knowledge and experience in this field? 5 What aspects of Performance Management should be explored more through research? 6 Please provide some examples of organizations which you would recommend for study due to their approach to Performance Management and achievements. 7 Which are the main challenges of Performance Management in practice today? 8 What do you think should be improved intheuseofPerformanceManagement tools and processes? 9 What would you consider best practice in Performance Management? 10 Which aspects of Performance Management should be emphasized during educational programs? 11 What are the barriers in achieving higher levels of proficiency in Performance Management among practitioners? 12 What Performance Management question would you like to have answered? 13a We are developing a database of Performance Management subjects and degrees in Performance Management. What are your suggestions relevant to the database (i.e. subjects or degrees such as the Masters in Managing Organizational Performance)? 13b Which were the recent achievements in generating value from Performance Management in your organization? 13c As a consultant, what are the most common issues that your customers raised related to Performance Management? 13 questions - 12 interviews - academics . practitioners . consultants Australia . China . El Salvador . Kenya . Mexico . Peru . UAE . UK . USA Introduction
  11. 11. Performance Management in 2012 9 PERSPECTIVES 1 What does the term Performance Management mean to you? Performance Management is a very broad term and as a result, different groups understand the concept in different ways. Anecdotal evidence reveals that most people perceive Performance Management as referring to individual Performance Management. Performance Management is considered to be a series of management tools and processes used for connecting the individual, group and organizational levels ofanorganization.Theseprocessesmonitor, control and manage the strategic and operational direction of an organization. Specifically, key practices may include setting priorities and operational plans, establishing targets and relevant KPIs. The goal of Performance Management processes is to help organizations achieve their desired results, oftentimes expressed through strategic objectives. However, Performance Management is more than just about achieving strategic objectives. It also aims to drive continuous organizational improvement through constant reviewing and taking corrective actions, whilst continuing to make necessary adjustments to the Performance Management system. 2 What drives interest in Performance Management? The popularity of Performance Management has grown at a rapid rate and has become part of organizations’ core business processes. Furthermore, as organizations mature, the need for Performance Management systems shift from “preferable” to “must have”. In contrast, in countries such as China, the public is not that interested in Performance Management and is in fact quite critical of it. Nevertheless, three main reasons were seen to drive interest in Performance Management. 1. Links with driving organizational objectives The strong link between effective Performance Management systems and an organization’s ability to successfully achieve its strategic objectives has been a main driving force behind the interest in Performance Management. In other words, there is a consensus that Performance Management can translate efforts into results via more efficient and effective operations. 2. Allows for organizational improvement As effective Performance Management can help foster product and service innovation, excellent customer service, operational efficiency and productivity, Performance Management can act as a driver for continuous improvement. Furthermore, Performance Management aids in the ongoing need to keep up with changes and levels of competition within different industry sectors. 3. Specific areas within Performance Management Although the concept of Performance Management is popular, certain topics such as Balanced Scorecards have immensely driven general interest in Performance Management. The popularity of Balanced Scorecards has seen more Performance Management systems being implemented, however a major problem has been the fact that these systems have not been tailored to the specific needs (structure and culture) of organizations. 3 What are your thoughts on the relationship between Performance Management at organizational, departmental and individual level? In theory, high performing individuals should lead to a high performing department which ultimately leads to a high performing organization. Generally it is agreed that alignment between the individual, departmental and organizational levels is necessary in order to achieve organizational success. However, in reality, most organizations do not have such well aligned Performance Management Global Perspectives measures between the different levels, therefore much efficiency and effectiveness is lost. This can be attributed to leakages such as the objectives being poorly aligned or the lack of leadership capabilities. Given the complexity of organizations today, it means that when designing a Performance Management system, it is impossible to say whether the individual or the organization level should have priority. This is because traditionally, individuals act in the interests of the department, which serves the organization. Organizations are more receptive to suggestions put forward at the departmental level and also the individual level. Effectively, there the relationship needs to be symbiotic. 4 What are the 2012 key trends in Performance Management from the perspective of your knowledge and experience in this field? The growing popularity of Performance Management has meant organizations have begun to pay more attention to the trends in Performance Management. Although new trends are constantly appearing, below are three key trends in Performance Management for 2012. 1. Focus on soft Performance Management indicators In the past, organizations have focused mainly on hard indicators (financial, productivity, production and market share measures); however, recently there has beenmuchprogressinunderstandingwhich non-financial measures of performance have an impact on financial performance. This broadened view of performance measurement has meant that organizations and academics are looking beyond the shareholders’ perspective. For example, there have been developments in indicators which measure organizational culture, power distribution, the environment, the political climate, social responsibilities and other cultural factors. 2. Strategic alignment An integrated approach to Performance Management enables the “linking of It is through the mandatory introduction of China Mobile’s KPIs that that China Mobile has been able to have such success.
  12. 12. 10 PERSPECTIVES dots” between strategic performance and individual performance. Whilst it is easy to create KPIs and Performance Management systems, it is crucial that Performance Management is integrated in the process of developing strategies in order to help focus efforts and measure the expected results. 3. Other trends Other Performance Management trends in 2012 include the automation of Performance Management systems, increased transparency and collaboration. Other trends include Performance Management from a technological point of view and performance planning and culture. 5 What aspects of Performance Management should be explored more through research? Some of the ideas proposed by the panel of 12 Performance Management practitioners, academics and consultants for being researched in more details are: How to create a combination-of-KPIs system. Financial KPIs, by themselves, are insufficient; we need to have soft non-financial KPIs which complement the overall Performance Management picture. Furthermore, how would these new KPIs be appropriately weighted in importance? Whether current Performance Management systems fit or need to be modified for the new generation that has recently joined the workforce, Generation Y. How to get people to adopt Performance Management in management practices. In other words, researching more about the link between Performance Management and the culture of the organizations.Inparticular,howtobuild the culture that accepts measurements and is adaptable to changing them. How to teach people about the benefits. Potential avenues could include more research into success stories in both the private and public sector. The integration of Risk Management with Performance Management with Strategic Management and combining them all into one framework. 6 Please provide some examples of organizations which you would recommend for study due to their approach to Performance Management and achievements. Large organizations that are generally recognised to be well run or considered on “Best Company” lists are worth studying. Companiesthathaveperformedwellinclude Google and Facebook. In addition, one can look at companies that have managed to sustain high levels of performance such as IBM, GE and Siemens A.G. These companies generally have best practice methodologies and state-of-the-art applications and tools in Performance Management. On the other hand, companies that have not performed as well recently would also make interesting case studies. Some examples are Nokia and Kodak. Secondly, other less well-known organizations would also make interesting case studies, as they usually develop different and more innovative practices. Ajegroup. It is a Peruvian group which started in the Peruvian highlands as a small family business and which now runs on Asian, American and European markets. Interbank, a Peruvian bank which now operates around the world, but mainly in China. China Mobile was able to achieve the following results by using Performance Management measures, so the market share increased to over 72% and accounts for more than 70% of the whole market in China. It is through the mandatory introduction of China Mobile’s KPIs that China Mobile has been able to have such success. www.moneysupermarket.com. It is the world’s largest price comparison website based in the UK. Belron. It is the world’s largest and fastest-growing vehicle glass repair and replacement company. They have had significant success through a combination of three measures to manage performance. Total net conversions. How do we make sure that we capture work and deliver a satisfying job and get paid for it? Net promoted score. They were able to grow customer delight through the application of that promoted score. Operational excellence. It has enabled them to effectively manage at company level (they operate now in 34 countries) but also at branch level. BIMBO. It is the world’s biggest bakery company and is based in Mexico. It is an incredible example of Performance Management and the relationship with their labour force. TETRAPAK. It is a Swedish company and also a leading developer, manufacturer and marketer of packaging material, complete systems for processing, packaging and distribution for liquid food products. It is a good example of efficiency and focus strategy. Thirdly, as governments tend to operate differently than profit organizations, they are also areas of interest in terms of case studies. Abu Dhabi Government. It has the inspiring vision to become one of the top five governments in the world. They have established a real state-of- the-art PM framework that is based on Balanced Scorecard. US Federal Government – The Office Personnel Management (OPM) oversees the employee Performance Management and has the whole system aligning all employees with federal performance. The State of California. The Tax Revenue Department and the Franchise Tax Board have had great achievements with their current Performance Management system. The State of Virginia. It uses Balanced Scorecards for a number of departments and agencies, where all processes are aligned with the goals, resulting in
  13. 13. Performance Management in 2012 11 PERSPECTIVES effective people, programs and metrics. The Government of the Republic of Botswana. The Federal Republic of Ethiopia - The Ministry of Health. 7 Which are the main challenges of Performance Management in practice today? The greatest challenge of Performance Management in practice today is the sheer complexity of the concept of Performance Management. Not only does Performance Management have multiple dimensions, but there is no best approach. Organizations of different types should not be doing everything in the same way. There are usually even multiple good alternatives for organizations of the same type. Furthermore, the continuous internationalisation of business means that Performance Management must take into consideration operations worldwide. Another challenge is encouraging management to adopt a broader perspective on performance beyond just short- term financial results and to include the perspectives of other stakeholders in their consideration of what is good performance. However, many KPIs that assess the perspective of different stakeholders are intangible and therefore extremely difficult to measure accurately. Nevertheless, for organizations that have already realized this, the challenge would be to ensure that this underlying principle is reflected throughout the organization in terms of its culture, its structure and processes. Organizations have faced challenges implementing effective Performance Management system due to a lack of understanding and communication. There is the challenge itself to effectively explain the benefits of Performance Management systems. As a result, many organizations have a lack of motivation to explore such options. A lack of cooperation usually occurs due to the fear of making operations transparent and available to the scrutiny of outside parties. In addition, there are difficulties explaining to employees what exactly the process of implementing a Performance Management system is and how they can get involved. This lack of understanding of implementation can be attributed to the fact that research has generally focused on frameworks and measures. Therefore, there needs to be a stronger emphasis on design and implementation, followed by support and coaching. 8 What do you think should be improved in the use of Performance Management tools and processes? Four major issues were raised in terms of Performance Management tools and processes; these can be clustered into four fields of: Tool and process interconnection, in order to evaluate everybody on similar metrics and creating corporate linkage. Flexibility of these tools towards cultures, economies and specific needs, in order to increase efficiency and for instance to focus on the developing markets. Analysis and automation that help measure synergy and priorities to benefit from networks and to isolate errors. Tools can be improved in regards to training, research and usage on staff level, which creates more sound data as well as processing capabilities. 9 What would you consider best practice in Performance Management? Most of the interviewees saw clarity, transparency and shared definitions as key component of best practice in Performance Management. Furthermore, there was a strong emphasis on the need to view Performance Management as a long-term holistic, undertaking that needs alignment, the support and commitment of the organization on an ongoing basis. Measuring organizational maturity should thereby be the start of this holistic approach which should also leave space for intelligent feedback and a high volume of communication between all participants. 10 Which aspects of Performance Management should be emphasized during educational programs? This question provoked substantial criticism on today’s educational approach. In particular, critical thinking and the behavioural aspects and ways of thinking did not receive the attention they deserved in educational programs. In Performance Management, measuring the immeasurable needs creativity and imagination, innovation and a thorough understanding of the interrelations between processes, which is lacking in current educational programs. One issue was the fact that students did not feel connected with the business world, which led them to suggest that educational programs should comprise of 60% study and 40% practice. Another suggestion was that education should focus more on teaching people about the use of performance information, rather than teaching them measurement frameworks or to increase the understanding of metrics and analysis. Furthermore, although the importance of KPIs is undoubtable, students should also learn and understand that consumer satisfaction is the ultimate aim from which those KPIs should be derived. This is an interesting angle and may go in line with the bid for more research in educational programs. Thirdly, as governments tend to operate differently than profit organizations, they are also an area of interest in terms of case studies.
  14. 14. 12 PERSPECTIVES 11 What are the barriers to achieving higher levels of proficiency in Performance Management among practitioners? Besides a few barriers on an operational level, the main issue are individual barriers. These are again caused by the lack of critical thinking and competency, in addition to the lackofintegralmethodologiesandproblems with offering a clear definition of positions and job duties. These barriers harm the management process and sometimes fail to allow simplicity and alignment. The errors that occur at the operational level due to these barriers include short- sighted behaviour and the focus on operational instead of strategic results. Secondly, there is a lack of understanding within industry that Performance Management programs have to be able to rely on an intact and well organised governance system to create value. In summary, one can see that training and unclear communication are key barriers and fields where further maturity is required for achieving effective Performance Management. 12.1 What Performance Management question would you like to have answered? Basedontheissueshighlightedinprevious questions, there seems to be a strong demand for future research in the area of Performance Management. On one hand there needs to be further research on the combination of measurable and non-measurable KPIs with respect to each other, as well at to time. On the other hand, research should investigate how to improve capabilities to redesign and enhance organizations, as well as managerial processes. Specific questions regarding the direction that Performance Management should head towards include strategic planning or human resources and how Performance Management fits into the bigger picture. A standardized business process framework library would be beneficial to the field of Performance Management, especially regarding the demanded change in approach and view of the organization as a whole. 12.2 Which were the recent achievements in generating value from Performance Management in your organization? Many participants of our survey found that the Performance Management systems they had implemented delivered substantial increases in measurable financial core figures. Not only was an increased in EBITDA noted, but empowerment, an increase in focus and excellent employee incentives were noted as results along with increased accountability and alignment. Whilst there may have been a noticeable slowdown at the end of implementing changes, these will start affecting the vitality and enthusiasm of staff and on the long-run shareholders returns will improve. This is not true only for private enterprises, but also for government departments, especially in states where Performance Management systems existed throughout the state. 12.3 As a consultant, what are the most common issues that your customers raised related to Performance Management? When consultants engage with clients there seems to be a discrepancy between the levels of insight between both parties in regards to the Performance Management process. Customers see the steps needed as short-term and an isolated engagement, whereas consultants know that this does not hold true and that the first step is to broaden the understanding of the client. In addition, at the operational level, concerns were raised about the issue of holding individuals accountable from the organizational level as well as about the problem of how to manage change and motivate employees towards a performance culture. 13 We are developing a database of Performance Management subjects and degrees in Performance Management. What are your suggestions relevant to the database (i.e. subjects or degrees such as the Masters in Managing Organizational Performance)? Although opinions where diverse, there was consensus that the alignment needed to be achieved between the paradigm, the philosophical framework of studying organizations and KPIs. This should be measured with individual KPIs, as well as with organizational ones. Additionally, some responses suggested that the students and teachers should help with assessing the value of courses for the individual.
  15. 15. Performance Management in 2012 13 PERSPECTIVES From the perspective of interviewed practitioners, Performance Management represents a complex process of aligning organizational strategy and people to that strategy, an organization’s purpose to move forward.Itisdrivenbyactualimplementation of a system in the organization, combined with innovation, service excellence and efficiency, along with KPIs. Practitioners have different views when it comes to levels of Performance Management, but they all agree that the relationship between these levels is essential, by means of integration. For example, some see it from the point of view of variable salary (see Mabrouk Aib interview, page 27), whereas others consider it the blood running through the veins of the organization (see Dr. Ahmed Samy interview, page 23). In the case of public organizations, whose roles are somewhat different, Performance Management is about choosing the right KPIs and using them in the appropriate way. The 2012 Performance Management trends mentioned by practitioners were the development of strategy, in the private and public sector, business intelligence, automation of Performance Management Systems, as well as the acknowledgement of benefits of all opportunities. From a practical perspective, research should focus more on Performance Management in the context of organizational culture, process automation, strategy alignment and, according to some (see Jodi Traversaro interview, page 33), on implementing a Performance Management System in public institutions, where the management style is different. Measuring performance is, as most practitioners agree, faced with significant challenges. One of them is the lack of a formal strategy, applied at all levels, not just by the upper management, put together in a clear management system. In addition, the complexity of managing performance makes it difficult to align strategy across levels and to keep a satisfying degree of feedback and cooperation. In public service organizations, the challenges are even greater, as leaders in government, for example, need to be formed as such when it comes to Performance Management and because the context of such an organization is different than in the private sector. This makes it hard to measure performance, especially when the impact of a public institution is often far broader. When asked about what they consider to be best practices in the field, practitioners outlined the measurement of organizational maturity, the use of Balanced Scorecard and a stable and clear plan which should be followed by open minded teams. Concerning the development of educational programs, practitioners support the emphasis on critical thinking and systemic approaches, a more pragmatic approach to theory, as well as to KPIs and a higher level of acknowledgement of employees as the core of the system. From the practitioners’ points of view, Performance Management is an intricate process which needs to be adapted according to the context of the organization. Whether it is public or private, there is a need for more formality in applying strategy, for example in the form of a worldwide database to enable standardized process framework. Practitioner Perspectives
  16. 16. 14 PERSPECTIVES Academic Perspectives From the academic angle, Performance Management gives great importance to strong alignment in an organization, of both performance at different levels and the characteristics of that performance, based on the efficacy, efficiency, effectiveness, ethics and aesthetics, the 5 Es (see Ricardo Rodriguez-Ulloa interview, page 43). Current trends of Performance Management are directed, among others, towards the way the human factor is included when measuring performance. For example, thereisinterestinknowinghownon-financial KPIs are and will be used to measure financial aspects. A growing level of acknowledgement concerning the importance of considering human aspects in the context of Performance Managementwasalsonoted.Thisleadstothe development of different types of KPIs, which reflect not only the human approach as part of the scientific one, but also the global issues and the synergy between the hard and the soft – the science and the person. Research should focus on building better systems of measuring and integrating KPIs. These systems need to be supported by systemic thinking and adequate technologies. To complete this view, the need to modify the current principles and methodologies of Performance Management should be addressed, so as to fit the needs and views of the next generation of workforce. Moreover, research should use not only the examples of high-performing companies, such as Facebook and Google, but also those of under-performing organizations, like Nokia and Kodak. Regarding aspects which need improvement, opinions vary. Some think that Performance Management products should be better understood before acquired and applied, whereas other views state that the use of tools at an individual level, including the feedback process is the most important aspect to be improved, thus making effective communication one of the best practices in the field (see Sujay Nair interview, page 16). From the academic perspective, educational programs should emphasize on teaching students how the principles and theories of Performance Management can and are applied in real-life situations. This should be done by developing students’ critical thinking, spirit of innovation and systemic thinking, adapted to the current global contexts. One important barrier standinginthewayofsuccessfulPerformance Managementimplementationsisthefinancial aspect. Many organizations seem to be bound by financial objectives and the capital markets, which leads to a lack of integration between the financial and operations areas of an organization. In addition, there is a lack of critical thinking and of smart technologies to support performance measurement. At last, in developing educational programs on Performance Management, it would be important to create an overview of the programs’ quality, by offering a detailed profile of both the professors and the students taking up each subject. Also, programs should focus more on the alignment between the criteria of measuring performance and the actual KPIs, as well as on aligning an organization’soverallKPIswiththeindividual ones.
  17. 17. Performance Management in 2012 15 PERSPECTIVES Consultant Perspectives From the point of view of consultants, Performance Management should, first of all, be distinguished from performance measurement which implies more focus on KPIs, rather than on the strategy itself. Also, Performance Management represents the correct management of resources available, in order to achieve organizational objectives. In the public sector, what drives interest in Performance Management is mainly the impact on society, as well as the setting of manageable and attainable targets. However, in both the private and public sector, clarity is an essential driver of success. Concerning Performance Management at organizational levels, an interesting aspect is brought forward by one practitioner - performance architecture (see Alan Meekings interview, page 29). Performance Management systems cover all areas and levels of a company and include all logical processes enabling decision making. Commitment, passion and full involvement are some of the others aspects mentioned. One of this year’s trends in Performance Management includes a concept called Connected Performance and which is comprised of four parts: Performance Architecture, Performance Exploration, Performance Planning and Performance Culture (see Alan Meekings interview, page 30). When it comes to research, consultants agree that what needs more analysis is generally leadership and the process of leading others. Since there is a misconception that people who are promoted must have the needed leadership skills, it is important to control the flow of work and to stay on course of your leadership plan. In this context, BIMBO, TETRAPAK and MoneySupermarket are considered to be examples of good leadership and healthy Performance Management. Nowadays, globalization is seen by some consultants as a challenge, since it makes Performance Management difficult to standardize, especially if an organization operates on different markets in different countries. This challenge is often completed by insufficient levels of motivation, mobilizationandcommunication.Oneofthe best practices to overcome these challenges is a good strategy implementation which takes into consideration the diversity of human resources across the world. Regarding how Performance Management is taught, consultants believe thateducationalprogramsshouldemphasize more on leadership and information management, in the context of reality and real-life situations. One issue related to Performance Management is the fact that sometimes people are overwhelmed by the amount of data and they need advice on how to organize everything, using the right tools. Other issues raised are about the impact of strategy of obtaining performance results on Research & Development investments, as well as about the lack of competition.
  18. 18. 16 PERSPECTIVES Interviews The following interviews are alphabetically arranged with regards to the interviewee’s surname. Interviewee name: Sujay Nair Title: Lecturer Main subjects: Enterprise Performance Management Strategic Management Accounting Organization: The University of Melbourne Country: Australia Continent: Australia 1. What does the term Performance Management mean to you? It is a very broad term. For me, I would say, Performance Management is comprised of a collection of principles, tools and techniques to help an organization achieve its objectives. 2.WhatdrivesinterestinPerformance Management? The reason why there is a strong interest in Performance Management is because of itsstronglinkstotheorganization’sabilityto achieve its objectives. Organizations use the principles, tools and techniques of Performance Management to ensure that the purpose of their existence is fulfilled. 3. What are your thoughts on the relationship between Performance Management at organizational, departmental and individual level? In an ideal environment, a high performing individual should lead to a high performing department. And a high performing department should lead to a high performing organization. There should be a very strong link. In reality, it sometimes doesn’t happen in that way because of leakages. I think the most common leakage happens because the objectives of each of these components are not aligned. So even though a person is doing his job and achieving his or her performanceobjectives,itdoesnottranslate into the department achieving its goals and objectives because they are not consistent, and so on and so forth. The other source of leakage, in addition to the misaligned objectives, is the lack of leadership capabilities. So although a person is really doing well in his job, the leadership at the department and/or organization level is not able to translate a good performance at the individual level to good performance at the departmental and /or organizational level. 4. What are the 2012 key trends in Performance Management from the perspective of your knowledge and experience in this field? One of the trends is the broadening of performance considerations beyond the shareholders’ perspective. So when one looks at how an organization is performing, one is not just confining oneself to the shareholders, but also asking the question on how it is performing in the eyes of the employees, local communities, global communities and so on and so forth. So I think this is one important trend. Another trend would be the recognition of the behavioral elements and human biases in Performance Management. So although we have certain tools or techniques that in theory should work in a certain way, and because human beings are not always rational and are subject to biases, the actual results could be different. These behavioral aspects which affect the way people act in the real world may cause one to reconsider some of the Performance Management principles and/or tools that are used. 5. What aspects of Performance Management should be explored more through research? Going back to what I mentioned about the first trend in 2012, we need more research on what is the right way to measure performance in a broader sense. So instead of just measuring shareholders’ returns, where we have a lot of theory and experience in doing, how does one measure ‘returns’ to the employees, local communities, global communities? Another interesting topic that would potentially benefit from more research is whether the principles, tools and techniques that we have in Performance Management need to be modified for the new generation that has recently joined the workforce, Generation Y. The hypothesis is that Generation Y has very different needs and wants compared to Generation X and also to baby boomers. Therefore there could be a need to modify the principles, tools and techniques we have been using to manage performance. 6. Please provide some examples of organizations which you would recommend for study due to their approach to Performance Management The reason why there is a strong interest in Performance Management is because of its strong links to the organization’s ability to achieve its objectives. Organizations use the principles, tools and techniques of Performance Management to ensure that the purpose of their existence is fulfilled.
  19. 19. Performance Management in 2012 17 PERSPECTIVES and achievements. I think companies that have performed well recently, like Google and Facebook are interesting to study. In addition, companies that have performed continuously well and managed to sustain that performance level over a long period of time, like IBM and GE, would also be interesting. On the other hand, underperforming companies like Nokia and Kodak are also interesting to study to highlight paths that management should avoid. Having said this, it is quite likely that many, if not all of these organizations have already been studied by researchers and academics. 7. Which are the main challenges of Performance Management in practice today? The challenge is to encourage management to adopt a broader perspective on performance beyond just short- term financial results and to include the perspectives of other stakeholders in their consideration of what is good performance. For those organizations that have already realized this, the challenge would be to ensure that this underlying principle is reflected throughout the organization in terms of its culture, its structure, and processes, this is one of the challenges faced by organizations today. 8. What do you think should be improved in the use of Performance Management tools and processes? One area that we can do better is the way the Performance Management tools are used. For example, in the case of individual performance, based on my observations, I believe that the quality of the discussion that happens during performance evaluation dialogues can be improved. Does the supervisor commit enough time to have a thorough discussion? Does the supervisor ask the tough questions when performance is below expectations? Does the supervisor get at the root cause of the underperformance? Does the supervisor give the person evaluated concrete steps on how they can improve their performance going forward? Does the supervisor provide informal feedback frequently, and not just once or twice per year - to give the person opportunity to improve his/her performance and ensure there are no surprises when formal performance ratings are handed out? 9. What would you consider best practice in Performance Management? I know of an organization that has a very robust individual performance evaluation approach. In this organization it was not uncommon to have informal monthly performance conversations between the individual and his/her supervisor. However, formal evaluation took place every six months. So these frequent informal discussions around performance ensured there were no surprises when it came to the bi-annual formal evaluation. The supervisors spent significant amount of time doing these performance evaluations, which in turn sent a signal that it was a very important thing to get right and added credibility to the process. As part of the formal evaluation process, the supervisor typically spoke to between 8 and 15 different people who worked with the employee to get a sense on how he/ she is performing. Once the performance is calibrated across a similar cohort of employees, the supervisor will then have the formal performance dialogue with the employee. This dialogue will cover both the strengths and developmental areas for him. Employees were encouraged to find ways to leverage on their strengths as making full use of these “spikes”would be crucial in succeeding in this organization. Time was also spent talking about the developmental areas of the employees and the steps he/she could take, with the supervisor’s support, to improve in these areas. The supervisor had to ensure that these developmental areas were made known to the employee in no uncertain terms, but at the same time were not over emphasized, at the expense of his/ her strengths. 10. Which aspects of Performance Management should be emphasized during educational programs? Going back to the definition of Performance Management, I suppose that educational programs should focus on the most important principles, tools and techniques that are currently used. So it would be important to cover these in the class. In addition, real life examples of how organizations use these principles, tools and techniques should also be highlighted in class. 11. What are the barriers to achieving higher levels of proficiency in Performance Management among practitioners? I think one of the most important barriers is the overemphasis by capital markets on short-term financial results. The pressure for companies to announce quarterly earnings and guidance, and the level of emphasis analysts place on these announcements encourage the companies to think short-term to the detriment of its longer term objectives and performance. 12. What Performance Management question would you like to have answered? I think this is similar to what was asked before in question 5 – therefore my answers here would be the same. 13. We are developing a database of Performance Management subjects and degrees in Performance Management. What are your suggestions relevant to the database (i.e. subjects or degreed such as the Masters in Managing Organizational Performance)? I presume the database would include the name of the organization offering these courses, the type of subjects or the course being offered (Masters vs. Bachelor’s degree etc.), how long it would take, the costs involved, the topics that would be covered and so on and so forth. It would also be good to have the following two pieces of information (if not already covered in the database). First, a fairly detailed profile of the academic/ lecturer involved in delivering the subject and second, the profile of students who would be in the class. I think these 2 pieces of information will be important determinants of the quality of the program. The challenge is to encourage management to adopt a broader perspective on performance beyond just short-term financial results and to include the perspectives of other stakeholders in their consideration of what is good performance.
  20. 20. 18 PERSPECTIVES Overview 1. What does the term Performance Management mean to you? Different groups understand the concept of “Performance Management” in different ways. In China, the different concepts are combined and selected in order to suit the political and environmental conditions before putting them into practice. According to my research in Europe and North America on the practice of Performance Management in China, I think several features should be mentioned: First, from the group perspective, Performance Management is a synergy of individual, family and organization. The cooperation and effect among these three parties contributes to a sustained high performance in an organization. Second, Performance Management is an integral activity. From the vision and target design to the process control, to result evaluation and then to the final achievement, the whole process is a closed circle. People in China generally accept this point of view. Third, from the finance perspective, Performance Management is a control system. The CEO treats it as a system in which different strategies can be applied and implemented; HR treats it as a tool which can explore employees’ abilities to achieve their targets, allowing them to cooperate with the organization; employees treat this as a tool which can make their work clearer, more organized through a higher degree of planning. Thus, in China, the concept of Performance Management varies with different people; each approach has value in practice and is feasible. When it comes to the group’s point of view, from the Performance Management’s essence and processes to its role on management decisions, we should consider it from different angles.. 2. What drives interest in Performance Management? In reality, the Chinese public is not interested in this topic, it is actually quite critical of it. HR might be interested, and the researchers may be more interested in it. Most of the staff has a negative feeling towards Performance Management, and leaders in industries are not interested in it. AccordingtooursurveywithinChina,nearly 50% of the employees and organizations have low recognition and satisfaction towards Performance Management. Personallyspeaking,Iamveryinterested in this topic because I am both a researcher and a practitioner, and I am also an expert who promotes this concept in China. I think that Performance Management is helpful to individuals, families and organizations since I practice it myself and have experienced its benefits. That is the reason why I do it. However, in China, the concept has not been driven, instead, there is more pain, resentment, resistance and rejection. 3. What are your thoughts on the relationship between Performance Management at organizational, departmental and individual level? I do not agree with some of the arguments put forward by Western countries on Performance Management. Their process involves setting goals at the organizational level, then breaking them down at the departmental level, followed by having the departments complete the goals and missions by way of allocating tasks to sectors and finally passing them down to the employees. As a result, the goal of the entire organization can only be achieved if the individual staff members complete the tasks that are assigned to them. I think that this method of Performance Management is only half of the picture. In China, the other half relates to relationship dynamics; it is impossible to make a conclusion as to whether it should be the individual priority or the organizational priorities, because sometimes individual Performance Management is superior to organizational Performance Management. In this case, when designing a Performance Management system, we should use the bottom-upmethodinsteadoftop-downone, which means the organization is at the mercy of Performance Management at the individual level. In this case, the organization needs to do some adjustments and optimizations according to the individual needs, goals and internal commitments. By doing this, the entire organization can achieve high performance and organizational goals. From this perspective, in order to ultimately achieve the organizational performance, individual performance, should be a focus. This relationship is often present in the high- tech and traditional businesses. This is especially important now for a number of reasons: “career boredom” from people who started their careers in the 1980s and Interviewee name: Dr. Feng Cai Qiu/Frank Qiu Title: -Executive Director/Senior Partner -Chief Expert of HR Management -Expert of Performance Management Researcher of Global Telecommunication Talent Management Organization: Singapore Empower Consulting Group Pty., Ltd. Country: China Continent: Asia Most of the staff has a negative feeling towards Performance Management, and leaders in industries are not interested in it. According to our survey within China, nearly 50% of the employees and organizations have low recognition and satisfaction towards Performance Management.
  21. 21. Performance Management in 2012 19 PERSPECTIVES 1990s, the impact of the Internet economy, the talent diversity and individuality, and the seamless exchange of knowledge promote the relationships among staff. This means that the Performance Management system among the individual, departmental and organizational levels has become increasingly complex. It is not simply individuals at the mercy of the organization or vice versa. In the international arena, I think this relationship will become increasingly diverse and personalized. Therefore, we need to model ourselves to companies that are already doing this. For some large state-owned enterprises in China, employees obey the department and the department obeys the organization from the enterprise, central, provincial and prefectural level. However, for the grass-roots enterprises which are under the prefecture level, if they want to achieve high performance, most of the time the departments are required to obey the individuals. When the individuals are subordinate to the organizations, a clearer symbiotic relationship exists. So in China, we need to consider the relationships according to different levels, groups, industries and organizational maturities. Grass-roots employees are more adaptiveandcangowiththeflow;therefore, the use of Performance Management should be in an open environment. In this environment, the relationship between individuals, departments and organizations is relatively casual; while individuals still obey the department and the department still obeys the organization, the organization is more receptive to suggestions put forward at the departmental level and similarly the departmental to the individual level. This is symbiotic relationship. For organizations which are in a non-market environment, they are in a very traditional organizational environment, so there is very clearly a top-down relationship there. Research 4. What are the 2012 key trends in Performance Management from the perspective of your knowledge and experience in this field? I think there are a few points you may want to consider: firstly, from the central and the national point of view, the concept of and practice of Performance Management will continue to be valued and enhanced. Last year, Premier Wen proposed to strengthen the reform of Performance Management in government, and also piloted the idea in Shenzhen, Shanghai and Xiamen. From the SASAC (State-owned Assets Supervision and Administration Commission) perspective, SASAC has asked more than 150 state-owned enterprises to carry out the implementation of a Performance Management system. In the private sector, because of market competition and financial crisis, improving basic operations and improving their work quality and efficiency, are two reasons why they also strengthen Performance Management. From the education system, thePerformanceManagementisperpetually being improved and refined. There are more and more scholars considering individual differences when they study Performance Management. Thus, from the academic point of view, Performance Management is increasingly popular. Secondly, from the entire technological environment point of view, there are three parts worth mentioning. 1. Balanced Scocrecard gained a lot of promotioninthepastfewyears,butthereare plenty of problems that came out during the process of promotion. I did research in the University of Nottingham and Cambridge in England, and I also communicated with Dr. Kaplan, the professor at Harvard University. I found that many Chinese enterprises had problems when they were using the Balanced Scorecard. They began to doubt the practicality of the Balanced Scorecard in China. This is also my PhD research topic. After much research and investigation, I found that Chinese organizations casted doubt on the application of the BSC and started thinking about how to improve the BSC in order to adapt it to the Chinese environment better. This also means the technology and ideas behind its logic required some adjustments. China now has already begun research in this area, and I am also looking for a suitable BSC. 2.TheapplicationofKPIsinthetechnical fields is not enough. In Britain, Professor Neely in Cranfield School has published a book named “Performance Prism”. This theory is rarely known by people in China, because there are not enough people who are interested in learning, understanding and applying this theory. Therefore, it is not as popular as the Balanced Scorecard in China and there are not many people putting it to use. 3.ChinaisstillusingtheDuPontmethod. In financial management applications, organizations assess business performance by decomposing the original DuPont index to set KPI targets. In addition, the Chinese state-owned enterprises are primarily using EVA in evaluating the performance. China is still using this method, and is still improving upon it. 4. Whether Chinese organizations can make the Balanced Scorecard, KPIs and traditional EVA assessment to align and to evaluatedifferentlevelsofemployeeswithin an organization. For example, the strategic level may adopt the BSC, the departmental level may use KPIs and the staff level may create a new model to evaluate what is detailed, but staff growth and development can still occur while maintaining the company’s vision and financial objectives, despite having different PM tools being used. Currently, the demand of Performance Management at the technical level is very high. However, it is hard to say whether the study that involves hierarchical classification of different Performance Management systems would be successful or not. I have done a lot of research in this area, and created the models to explore a suitable Performance Management system to our employees. This system should be different from the Balanced Scorecard, the EVA and the complicated KPIs, it can track staff to help them concentrate on their future and their personal development, I do not agree with some of the arguments put forward by Western countries on Performance Management. [...] When designing a Performance Management system, we should use the bottom-up method instead of top-down one, which means the organization is at the mercy of Performance Management at the individual level.
  22. 22. 20 PERSPECTIVES helping them to reach their individual dreams and needs, which can stimulate enterprises to reach sustainable, higher levels of performance while at the same time improve the efficiency of the process. How to incorporate these comprehensive factors together, which are the past, the present and the future, the financial and non-financial systems, the leading and lagging indicators, are also mentioned by Kaplan in the Balanced Scorecard concept. More and more people in China require a new system to be designed to suit the employee level. The third trend is the group in China that will pay close attention to Performance Management. In 2012, the foreign-funded enterprises will focus less on Performance Management, because they have incorporated it as a part of their quality management system. However, I think more people in state-owned enterprises will be concerned about Performance Management, becausetheyarefacingcompetition and internationalization and they don’t want to lose their momentum in the global financial environment. Therefore, more managers and HR departments will pay attention to Performance Management in the state-owned enterprises level and in the employee level. In addition, the degree of concern in private enterprises in 2012 will also be improved, but not as much as the state-owned enterprises. Private enterprises are also not completely out of the impact of financial crisis. The state-owned enterprises do not have such problems, and they only need to focus on development and expansion. Therefore they need have suitable Performance Management in the aspects of technology, management and innovation. In terms of the academic field, they will shift their attention from the strategic level to the technical and theoretical research on the staff-level. There has been too much research on the strategic level worldwide but too little attention payed to individual Performance Management in a more diverse society. In China, the individual environment is experiencing a turbulent time, and the employees’ ideological values have not yet fully formed; many scholars and experts may not be aware of this fact and know how to design a Performance Management system for those employees who have not formed their own dominant values. This is not only relevant to China, but also to the world. In the future, it will be a trend and also a challenge to study Performance Management in a diverse, intricate and flexible environment. 5. What aspects of Performance Management should be explored more through research? I think Performance Management should be studied more from an individual human level more than a technical, group level. This is the paradigm shift academics need. For example, when I was doing academic research in the United Kingdom and the United States, I found that even though the application and implementation of Performance Management systems in enterprises are identical to that in a Chinese context, their results are higher and better than that of China. This is because their culture matches the theory. In China however, the human environment has several characteristics that need to be considered. First, study the effect of China’s political influence on the enterprise, and the associated workplace satisfaction, employment, values and professional ideology from the perspective of the Chinese people. This idea directly impacts on staff’s concept of employment and their judgment on their success. In European countries, this perception has been formed, while in China, it is still blank. Therefore, in the human environment, in the application and implementation of Performance Management we need a breakthrough. Second is the research on the enterprise environment. In China, the ecological environment increasingly affects the execution and implementation of Performance Management. This ecological environment includes presidents. The presidents in Chinese enterprises and in foreign-funded enterprises are not the same: general managers in China are not determined by the market, or the shareholders, or the business performance. Therefore, the study of how leaders affect Performance Management and whether there is a Performance Management system suitable for Chinese environment, this subject will be more and more important. Third, study the changes in the staff’s mentality, especially the difference between 80-90s and 50-60s. There is a huge change and conflict on the outlooks on life, values, career outlook and personalized view within these 30 years. This change in Western countries occurred over the space of 100 years. Following in the ideological background of traditional Chinese culture, the traditional business leaders (who were born in 1950s-1960s) have plenty of conflict with their employees (who were born in 1980s-1990s). This conflict will affect the design of Performance Management systems, coordination and matching, and to promote a balance between employers and employees inside the organization. Fourth, I’m doing a study of the harmonious development of PerformanceManagement.China raised three slogans: a rapid and healthy development, to create a harmonious environment and education reform. Researchers in Performance Management should study how to get individuals, families and organizations to cooperate and respond to the characteristics of China’s development. In Kaplan’s theory, the relationship between staff, organization and customer is coordinated very well. There are still some criticism that the theory has no synergy to role of the government, suppliers, buyers and other interested persons. In China, I will be researching more in the collaborative management of individuals, families and organizations, since they represent different customer needs. At present, the government also proposed this need, and both businesses and ordinary people need a harmonious, healthy and happy organization. Performance Management is an entry point and we have the opportunity to explore how we can design a system that encourages better performance. 6. Please provide some examples of organizations which you would recommend for study due to their approach to Performance Management and achievements. Currently, we can’t say China has a In the Chinese context, effective Performance Management is difficult to achieve because of the lack of free competition and the difficulty to leave a company.
  23. 23. Performance Management in 2012 21 PERSPECTIVES successful case. I’ve been a performance consultant in China Mobile for 10 years. Upon utilizing Performance Management concepts and frameworks, China Mobile was able to reach a higher level, but not a very successful level. China Mobile achieved results in three aspects by using Performance Management. First, it improved the market coverage from top to bottom, and its market share is over 72% now in China. Second, its revenue market share accounted for more than 70% of the wholemarketinChina.Thesetwoindicators show China Mobile’s improvement on its financialperformancethroughPerformance Management. Third, through the pressure transmission of Performance Management, China Mobile pushed the Chinese mobile communication industry to greater heights. Communication used to be a luxury, while now almost everyone in China has a cell phone. This is not because something the telecommunications industry brought about. It was actually caused by the mandatory introduction of China Mobile’s KPIs. China Mobile made every employee take a top-down market penetration approach, which meant focusing from the city to the countryside, then to the children. This mechanism promotes the development of the Chinese communication industry to the world and the upgrading of the Chinese people’s quality of life in the modern era. Practice 7. Which are the main challenges of Performance Management in practice today? The challenges in government departments, state-owned enterprises, foreign-funded enterprises and private enterprise are not the same. But they also have some basic commonalities. First, the political environment in China for Performance Management is not very mature. Second, the soil for China to implement Performance Management also needs to be cultivated. This soil refers to the human resources market, which requires fair, free and open competition, and this in China is not yet fully formed. Therefore, the concept of “fair competition and survival of the fittest” of Performance Management is quite difficult to achieve, and Performance Management can not play its proper role in China. For example, in foreign companies the Balanced Scorecard is used as an important tool to do staff classification in order to promote fair competition, while this situation is difficult to achieve in China. This is because Chinese companies can not let employees leave the company, or dismiss unsatisfactory employees. China does not exist in this environment, because Chinese employees are formal workers who cannot be dismissed easily. Human resources market in foreign countries is a free market; it is a two-way voluntary relationship. Therefore, in the Chinese context, effective Performance Management is difficult to achieve because of the lack of free competition and the difficulty to leave a company. Third, the level of professionalism in the application Performance Management needs to be upgraded. In fact, many business owners, managers and employees apply Performance Management not in its original form, but rather relate it to the company’s variety of professional capacity system, for instance, incentive management, targets management, practice management, application systems, and docking new systems. The ability of professional managers in these areas is still lacking. Therefore, Performance Management is not a single system, but is required to supplement other systems. Hence, it requires professional managers to have a stronger ability to apply strict Performance Management frameworks and China is still in progress. Fourth, the Performance Management system in China is different from what is in foreign countries that pay more attention to the rules and systems. Therefore, in foreign countries, when the Performance Management system is used in the enterprise, there is system interactionandthisinteractionresultsinthe desired effect of Performance Management. However in China, regardless of the state- owned enterprises or private enterprises, many systems are still building. Therefore, when linking Performance Management to immature systems, the effect will be affected. Many people are still wary and don’t understand how Performance Management can be used to the benefit of the individual and the enterprise. 8. What do you think should be improved in the use of Performance Management tools and processes? Each person’s point of view should be different. With regards to the Balanced Scorecard in China, the biggest problem does not concern human resources, and does not imply rigid and flexible combination within human resources. The biggest advantage of the Balanced Scorecard is the effective integration of operational systems and financial systems. I think this is Kaplan’s contribution. So when a business is in need of operating systems and financial systems designed for organizational effectiveness, promoting the organization of sustainable development, this theory will play a role. So it is necessary to identify what kind of companies will have this type of problem. But when the focus of a business, at some stages is in the human resources or marketing, the BSC may not be the best tool. Although BSC also mentions the link between human resources, it only focuses on the association among the disciplines. How to use it in specific environment, what difficulties will be met during implementation and what features the human resources will have under different situations, those questions are waiting for in-depth study. There are a plenty of cases and examples in the practice of using BSC in operational systems and financial systems, but considerably fewer in the case of human resources. The primary segment in the Kaplan case study is reform at the strategic and application levels in the 12 enterprises which are primarily located in Europe and America. However, the practice and exploration on human resources aspect needs to be increased. In addition, he did not take into account the difference I use Performance Management in my family, and I also encourage all the employees in my company to use it. Encouraging every employee use the concept of Performance Management to build a harmonious, happy and healthy family to stimulate them to work more efficiently is what I practice.
  24. 24. 22 PERSPECTIVES between the human resources environment in Asia. Therefore, I also explore the application of the BSC in the Asian region, which needs to focus on the human resource management theory. In addition, the BSC does not take the psychological factors into account. It is more concerned with the overall organization’s application and day-to-day operations, but not concerned about each employee’s sustained growth and motivation. Although it is also known as the Staff Balanced Scorecard, its operation and logic aren’t focused on the psychological point of view, but rather on the financial perspective. Therefore, the BSC needs to be improved on the staff level. Globally, the successful Personal Balanced Scorecard theory is from an American named Lecsion, who made a number of theories that really resonate with me. In his view point, the starting point of the Balanced Scorecard is “empowerment”, and the ending point is “finance”. In China, I think this theory could be continued to be studied and improved. China uses KPIs very often, and three points need to be improved: First, how to improve KPI usage in collaborative departments. This is a short-term key focus for KPIs. The biggest advantage of it is the vertical transmission, but it is relatively weak on the correlation of horizontal value transfer. Second, many administrative departments can not use KPIs to quantify their performance, because they have trouble measuring immeasurable things. Third, distinguishing the lagging and leading KPIs and let staff perceive them correctly, as well as creating a corporate linkage design is also difficult. Fourth, KPIs and BSC are becoming IT-oriented, which means to get efficiency improvement from the support of IT systems in order to reduce the influence of human factors, China also needs to be upgraded in this aspect. 9. What would you consider best practice in Performance Management? The best practice should be at home. Bring BSC into families in order to create a harmonious and happy atmosphere in the family. I use Performance Management in my family, and I also encourage all the employees in my company to use it. Encouraging every employee use the concept of Performance Management to build a harmonious, happy and healthy family to stimulate them to work more efficiently is what I practice. It can also delay the departure of employees. To achieve the collaboration between employees, families and organizations, the employees in our company are a good example. In addition, as I mentioned before, China Mobile is also a good practice. Education 10. Which aspects of Performance Management should be emphasized during educational programs? First, the national environment should be emphasized, which means how to design Performance Management systems under this country’s political environment. Secondly, organizational culture and the ecological environment will directly affect the practice of Performance Management theory. We need to study how different cultures are embedding the design and implementation of Performance Management systems, for instance, how to combine the human environment and the living environment of Chinese enterprises to make the Performance Management more practical. Thirdly, the theory of Performance Management should be understood from practice, experienced and then summarized. In my opinion, university undergraduate and postgraduate students should be “60% study, 40% practice”, in order to really understand the practical science. This is my proposal for Performance Management education. For example, for a two-year EMBA, nine months should be used for practicing, so as to cultivate the demonstration of Performance Management capabilities. I raised 30 Performance Management capabilities and these capabilities must be proved through demonstration in order to become a qualified human resources student. In addition, on this basis, students must have a clear understanding on what are the specific projects of Performance Management capabilities. Take the 30 capabilities for example, we should tell students what they are, how to cultivate them, where can the students get the training for them and by using which way. When the students are qualified, which level they can reach, and what extent of work they can deal with after they go into the society. I hope those aspects could be emphasized because this applied talents are what China and the world welcome. 11. What are the barriers to achieving higher levels of proficiency in Performance Management among practitioners? Firstly, the organizational culture. The culture of performance implementation directly impacts the effect of an organizational performance execution. Performance culture includes the degree of recognition, competition, sense of fairness, identity and cooperation. A healthy performance culture is very important. Secondly, the science and differentiation of a Performance Management operating system. The science applies to different enterprises and different departments using different Performance Management systems. The differentiation means different departments should have different characteristics; therefore, they should use corresponding models to match their features. This is the scientific nature of Performance Management operating systems, which requires more targeting and differentiation, because it will directly affect the implementation of Performance Management. Many failures in China are due to the lack of consideration in these features at the designing stage. Thirdly, the ability in the full Performance Management training and the level of application eligibility that will directly affect the implementation of Performance Management. The Performance Management application level in China now is not high enough. Foreign-funded enterprises may be higher and private enterprises are in the middle. Therefore, we need to train a large number of professional managers in the capability of Performance Management.Fourthly,theimplementation ThePerformanceManagementapplication level in China now is not high enough. Foreign-funded enterprises may be higher and private enterprises are in the middle. Therefore, we need to train a large number of professional managers in the capability of Performance Management.
  25. 25. Performance Management in 2012 23 PERSPECTIVES of Performance Management is a long- term behavior, which should be gradually optimized and promoted. Specific question Practitioner Which were the recent achievements in generating value from Performance Management in your organization? From the staff’s point of view, first of all, the work structure is better meaning that the work will be more focused. Excellent employee incentives increase. Second of all, the number for excellent employees increases; the better they do their job, the greater return they will get. However, to the medium and poorly performing staff, Performance Management deprives them of their rights and interests. From the company’s point of view, through the operation of this system the company can, firstly, promote the establishment of long-term development concepts. By building such a system, long- term positive behavior in a company is increased. Secondly, the vitality of the organization will be raised. The activity may drop when Performance Management is just introduced into the company, however, the vitality will increase after a period of time. This vitality is mainly reflected in the business operations and it refers to the enthusiasm of the staff. Thirdly, in the long-run, after two or three years of introduction, the returns to shareholders will be increased, particularly for those enterprises which mandatorily implement Performance Management. The Human Resources management can reachahigherlevelandhaveastrongersense of accountability because the requirement on improving their professional standards is stronger. Before Performance Management is carried out, job challenges are relatively high. After implementation, the problems are highlighted, promoting the human resources to enhance the professionalism, and a change in the role from an affairs expert to a consultant expert. 1. What does the term Performance Management mean to you? What does Performance Management mean to me? I’ll try to answer your questions very briefly and simply, Performance Management to me is about understanding where the organization stands today and monitoring how it is going to achieve whatever future it sets for itself. So, understanding is key but also embedding improvement opportunities so that you know that your trend is always moving up, there is no value in Performance Management if you stay where you are, so that’s what really Performance Management means to me and I’m referring to corporate Performance Management, I’m not just referring to individual Performance Management because there’s always a confusion between the two. What I’m saying is that Individual Performance Management is only a component of Corporate Performance Management. Without improving, you’re not managing your performance because this is not just about recording, this is not just about monitoring, this is about managing the whole cycle and a very important part of that cycle is to assess where you are, review it and then make decisions to improve. Without that piece, it’s not really Performance Management, it loses the value. 2.WhatdrivesinterestinPerformance Management? Simple, straightforward answer to this question-Iwouldn’tappreciateanymanager that wouldn’t want to know how is he performing and how his team’s performing and how his function is performing and how his business unit is performing. I wouldn’t see that as a manager, this is why I’m also convinced that Performance Management is a key skill in any management. Now, organizations are basically a group of individuals who are working together for a certain cause. From the same perspective, the CEO of any organization knows, “how is he doing, how is he performing?” As an organization and as an individual the link is always there. So the interest is there, if I would rephrase the question, I wouldn’t be asking the interest, because you wouldn’t find anyone saying, “I’m not interested in Performance Management”, but you would see somebody saying, “I might see PerformanceManagementasactuallyacore thingtodo”,or“Imightseeitisasapreferred thing to do, more likely must have vs. prefer to have”. That is where organizations lie within those key perspectives and as you move from preferred to have to must have you mature as an organization. So regardless of the size of the organization at the start, whether it’s a small business or a big corporation, they wouldn’t focus much attention on Performance Management. They usually tend to move towards operations, you know, on-the-ground stuff and forget about Performance Management or lose sight of it. As they mature, they start learning that they have been doing something, but they haven’t really been monitoring what they were doing properly. There also could be Interviewee name: Ahmed Samy Title: Director – Corporate Strategy Office Organization: Western Region Municipality, Abu Dhabi Country: UAE Region: Middle East Performance Management is the framework; it’s like the blood running in the veins of the organization.
  26. 26. 24 PERSPECTIVES some situations where they might see no improvement, just the status quo and this is going to start driving more interest and considering it as a core business. Pretty muchanyonewho’sinvolvedinPerformance Management knows that this is not something that has definitely been the case, this is especially due to the intervention of business intelligence and how big it is. I’ve been in so many conferences and spoken on topics related to Performance Management and one of the key initiatives that are running in most organizations is business intelligence and how it’s supposed to furnish Performance Management and add value to the organization. In a nutshell, the answers are always there,howevertheadoptionitself is, which could be on a different level from one organization to the other depending on the maturity level. 3. What are your thoughts on the relationship between Performance Management at organizational, departmental and individual level? Performance Management is the framework; it’s like the blood running in the veins of the organization. I’m not saying that it should sit within a certain function in isolation from the rest of the business, that would definitely kill it at the start. It has to be embedded in the organization, it has to be a centralized overview of what’s going on at the organizational level, but as you cascade it down to the division and to the individual level that sort of alignment has to always exist and in fact when I say Performance Management I would like to relate it very much to alignment across the organization and the functional level and at the individual level and alignment here is more than just a cascading of objectives into the organization, alignment is making sure that everyone is performing towards a certain goal, that’s really the heart of Performance Management. As I mentioned there is a centralized element and there is a decentralized element because it has to live in the blood and soul of the business, but it’s definitely not an isolated function and it’s definitely not something that should be left fragmented across the organization. 4. What are the 2012 key trends in Performance Management from the perspective of your knowledge and experience in this field? There are several of them. There is a structural trend where PM now gets to be recognized as a core central function, or the central piece of it is now being recognized and in fact the supporting structure like the RSM or the corporate strategy office or whatever you want to call it but at the end of the day now part of our business is PM even if you still call it quality, quality function. Thereisatrendmovingtowardsfromsimply monitoring your performance laterally to improving your performance and realizing benefits, that’s on the operational level and the project level, so in a sense if I was to explore it in one piece, on a project level, I mean if you look at the standard definition of a project, start to end, delivering a new product or service, I have a strong feeling you get a standard definition because you have been running so many projects across all the industries and all the places that I worked in as a consultant, at the end of the day they get a nice deliverable, especially for corporate development sort of projects, they recognize the implementation, they put it on the shelf but they never use it, and they never actually realize the benefit of that product. Realizing the benefit of the product is actually the heart of PM, whatever that is. Whether it’s a service or a product or a project, whatever it is, realizing benefits is the heart of PM. So moving from output delivery from a deliverable perspective towards benefits realization is another trend in PM. 5. What aspects of Performance Management should be explored more through research? The question is not much different to the previous question, if I’m looking at trends, then obviously, those trends have to be reflected in research, especially in applied research and that’s the part of research that I honor. So the concept behind benefits realization is here in its early stages and I have evidence for that. The concept of benefits management has to mature and sit within the organization. The concept of Risk Management, there has been so many different talks on Risk Management and how to align the Risk Management with the Performance Management with the Strategic Management all of them into one framework, that’s what David Norton and Robert Kaplan have been working on recently but again, I can see that there is always a confusion between enterprise risk management, project risk management the line is not clear and it should be the fact that there is even some research which suggests the establishment of offices that are looking Realizing the benefit of the product is actually the heart of PM, whatever that is. Whether it’s a service or a product or a project, whatever it is, realizing benefits is the heart of PM.
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